EurozoniaAug 4, 2011

What’s at Stake

by Mike Deri Smith

“We now return to your regularly scheduled programming, namely [the] collapse of the Eurozone,” remarked economist Tyler Cowen on Twitter, as a debt ceiling deal seemed in sight. While Cowen is flippant, the European rescue package announced last month hasn’t calmed investors. Italian and Spanish bond yields hit an all-time high on Aug. 2, meaning that borrowing is getting more expensive, with confidence in those countries at an all-time low, close to non-existent.

Here’s what’s at stake should the economic crisis worsen: welfare states will cut deeper and inflict more austerity measures; there will be a weaker European voice on the world stage; and most importantly, Europe will drift further to the right, into the laps of Europe’s populist far-right parties, already enjoying success.

Europe has never had so many conservative parties in power (this interactive map shows the continent’s rightward drift). The left should be able to take advantage, but instead of conservatives moving to prevent that from happening by becoming more centrist, they’re only moving further right. That’s unlikely to change any time soon, with the right and far-right able to score easy points the more European economies suffer, with immigrants and the E.U. a likely scapegoat.

Thorbjørn Jagland, the Norwegian chairman of the Nobel peace prize committee and former prime minister, recently explained that political leaders “play with fire” when they suggest that multiculturalism has failed, enflaming anti-Muslim sentiment instead of defending diversity.

The E.U. is starting to act to address the threat of the far-right, with European Commissioner for Home Affairs Cecilia Malmström noting that the ramblings of Breivik’s 1,500-page manifesto are not uncommon sentiments. Breivik attracted plaudits from various far-right political parties not for the violence he committed in Norway, but for his ideology. Since it’s an ideology of hate and violence, I am not reassured. I only see the far-right prospering from further economic trouble.